On Thursday, activist investor Bill Ackman published an open letter to the board of J.C. Penney (NYSE:JCP) suggesting that the new CEO search process has not progressed quickly enough. On Friday, after push back from current chairman Thomas Engibous, Ackman suggested that the board is "flying blind" and Engibous needs to go. Personally, I agree with Ackman that a new CEO needs to be found quickly. Mike Ullman, the interim CEO was brought in to stabilize things and he has not been able to do that. JCP shares continue to plunge amid rumors that CIT group cut funding for future JCP shipments.
Christine Day Leaving Lululemon (NASDAQ:LULU)
In mid June, in what came as a shock to investors, Lululemon CEO Christine Day announced her departure from the company. During her tenure as CEO, which began June 2008, shares of LULU were up more than 400%.
Prior to joining LULU, Day served as the head of Starbucks' Asia Pacific Group where she was very successful. I say this because it shows that Day has had a diverse experience in retail. Interestingly, both Starbucks & LULU are cult type companies with loyal customers. At the moment, the biggest problem facing J.C. Penney is that it has alienated its customer base.
Why Day Left Lululemon
Christine Day has not given a detailed explanation of why she decided to leave LULU other than to say "it was a personal decision of mine." However, in an email to Fortune, Day hinted at why she left LULU:
There is no difference in strategic vision for the company, we were and are aligned. My values include discretion. While I know everyone would like to know 'the reason' [I'm leaving] there are some things that should remain private because the truth is the good things outweighed the bad and by being respectful and grateful one can remember that.
From this statement, it is fair to say that Day is not leaving to "spend more time with her family." Day has said that after finishing her remaining time at LULU, she will take six months off before looking for another CEO job.
Day's potential timetable would seem to be at odds with Ackman's wish to find a new CEO within 60 days. That being said, under the right circumstances, I believe a deal could be reached to bring Day to JCP in the near future.
Why J.C. Penney Needs Christine Day
Unfortunately, I don't think JCP will have an easy time getting its old client base back. Instead, JCP needs to create a new brand that will attract a new customer base. JCP needs to become more trendy if it hopes to survive.
In my view, Christine Day is capable of making the aggressive moves needed to transform JCP into a new retailer.
At LULU, one of Day's first moves was to shut down the company's Japan stores in an effort to focus more on North America. Another major success for LULU under Day's leadership has been online sales. Finally, despite plans to depart, Day has also laid out aggressive plans to open Men's stores by 2016. I mention these three anecdotes because they are relevant to what, in my opinion, JCP needs to do to turn around.
JCP needs to close some of its weaker stores in order to better focus on stronger stores; JCP needs to focus on building a strong online presence as moving sales online may allow the company to sell some of its company owned real estate to create shareholder value; JCP needs to be aggressive by focusing on new concepts and store types. Day's experience at LULU is highly relevant to what is needed, in my view, to turn around JCP.
If JCP shareholders want a CEO who will try to "restore" the company back to its old days, then Christine Day is not the choice. In that case, the current CEO, Mike Ullman, would be a better choice. In my view, it's much too late for that: JCP cannot simply "undo" the past two years.